Higher energy prices on their way – April energy update from ZTP

When planning your budgets for the coming years be aware that there are some increases coming your way, particularly on Electricity, that are not related to the wholesale price.

The Contracts for Difference (CfD) charge to suppliers to help finance the new Capacity Market introduced in 2014 will soon be having a market impact on energy bills. It is already behind charges but at very low levels. By April 2017 it is likely to be adding 0.4p per kWh to your electricity bill. This has recently been brought forward from April 2018.

The Chancellor in his March budget has announced the scrapping of the Carbon Reduction Commitment for large business. The £800 million hole in annual tax receipts will be recouped through increases to the Climate Change Levy (CCL) which will impact small business from April 2019. Note that CCL on gas will also be increased at this time, and Gas will continue to see increases to CCL until 2025 in a “rebalancing” exercise.

The Government have just launched a consultation on reducing the cost of electricity to Energy Intensive Industries (EIIs) in the wake of the steel industry problems. The current proposal is to exclude EIIs from the Renewables Obligation and FIT levelisation elements of electricity bills, which will then be recovered from other energy users, including households. It is expected, if it goes ahead, that this will increase the bill of a small business by £360 per annum, a medium sized business by £15,000 per annum, and may take effect from April 2017. It is very likely this will be seen as a “Force Majure” incident and existing signed contracts could also see the increase.

In addition, we are now seeing the oil price recover from lows in January due to lower stockholdings in America and the possibility of a production freeze being discussed. This is having an impact on Winter 2016 gas prices, which in turn is increasing electricity prices.

So what should I be paying on a new contract now?

That will vary on when you last placed a contract, and also whether you use a lot of energy or are a small consumer. Business energy is generally available at a lower cost than domestic energy.

As of mid April 2016 in Canterbury if you are on a single rate electricity meter a unit rate below 10.2p per kWh is a guide that you are on a good rate, and your daily standing charge on this should be below 27p per day. If you are being quoted more than this you should consult a reputable broker.

Gas is more variable on volume but a typical small usage gas rate available in Canterbury at the moment would be around 3.0p per kWh with a standing charge below 25p per day. With gas as the usage goes up so does the standing charge – so beware of looking at unit rate only.

ZTP are happy to look at the energy bills of any BID business and comment on whether the rates can be bettered. There is no commitment to using us, but we hope you will find our service and results such that you will.

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Canterbury Connected Business Improvement District (BID) is an independent, business-led, not-for-profit initiative voted for by the businesses of Canterbury on the 18th July 2014 to ensure continued investment in Canterbury City Centre. Our mission is to help make Canterbury a vibrant, exciting, well connected and successful business community; an attractive, clean, green, safe and enjoyable destination for customers and clients, shoppers and staff, residents, students and visitors; and a profitable place in which to do business.